TMI Blog2010 (6) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... ngh, The assessee filed the present appeal against the order of the CIT(A), J K, Jammu, dt. 21st Jan., 2009, passed under section 250(6) of the IT Act, 1961 (hereinafter referred to in short, 'the Act'), for the asst. yr. 2005-06. 2. The assessee has raised following grounds of appeal : "1. Regarding addition of Rs. 18,66,460 on account of notional increase in net profit rate. (a) That on the basis of facts and circumstances of the case, the learned CIT(A) has erred in not completely reversing the addition of Rs. 24,88,613 made by the AO. The learned CIT(A) has applied net profit rate of 6 per cent in place of 8 per cent as applied by the learned AO making the addition of Rs. 18,66,460 as against addition of Rs. 24,88,613 by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as withdrawn. 5. Now, we take up main grounds of appeal raised by the assessee. The first effective issue raised in this appeal is that the learned CIT(A) has erred in not completely reversing the addition of Rs. 24,88,613 made by the AO. The learned CIT(A) has applied net profit rate of 6 per cent in place of 8 per cent and restricted the addition to Rs. 18,66,460 as against addition of Rs. 24,88,613 by the learned AO without any basis and without even giving the benefit of depreciation. The brief facts of the case are that the assessee is a carriage contractor, who had declared net income of Rs. 3,82,999 out of total receipts of Rs. 3,11,07,660. The case was processed vide non-scrutiny TMS and a refund of Rs. 5,40,600 was issued to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has ignored to take proper cognizance of the comparative rates of various other assessees dealing in the same trade. He drew our attention to the turnover of M/s. Naaz Transport Co., at Rs. 1,40,00,691.55, giving a profit ratio of 2.06 per cent and pointed out that the turnover of the assessee is much higher at Rs. 3,11,07,660 compared to the turnover of M/s Naaz Transport Co., which has not been considered by the CIT(A) while deciding the issue in dispute. He further relied on the decision of the Hon'ble Madhya Pradesh High Court in the case of the Hon'ble Madhya Pradesh High Court in the case of Ramdas Jugani v. CIT [2006] 282 ITR 356 wherein it has been held that profit rates applied by the AO and upheld by the appellate authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for determination is whether the AO was justified to apply a net profit rate of 8 per cent. The flat GP rate or net profit can very well be applied by the AO as it is mandated under section 145 of the Act if the assessee fails to support his trading results by production of books of account. In this case, as the assessee has repeatedly failed to substantiate his trading results, therefore, application of net rate is justified. However, only question would be whether the quantum of rate as applied by the AO is justified or not. The AO has himself admitted that assessee is a carriage contractor and has shown gross receipts at Rs. 3,77,07,660. The net profit declared by the assessee was Rs. 3,82,999 which yields net profit rate of 1.23 per ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nadvertently has been assessed by the AO separately. The AO will accordingly delete the amount of Rs. 3,82,999." 8.1 The decision relied upon by the learned counsel for the assessee in the case of Ramdas Jugani (supra) is on different facts and not applicable to the facts of the present case, as in that case the Hon'ble Madhya Pradesh High Court, has remitted the issue to the appellate authority to reconsider the rate which can be applied for estimating net profits. 8.2 In view of the above detailed legal and factual discussions, we are of the considered opinion that it would be fair and reasonable if the net profit rate of 4 per cent is applied to the gross receipts instead of 6 per cent applied by the learned CIT(A), on estimate basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot adopt a flat rate to compute GP as well as rely on the books for purpose of adding unexplained cash credits which were part of the scheme of balancing the accounts. 9.2 He further placed reliance on the decision of Hon'ble Rajasthan High Court, in the case of CIT v. G.K. Contractor [2009] 19 DTR (Raj.) 305 in which it has been held that AO having estimated the profit by applying a higher net profit rate to total contract receipts after rejecting assessee's books of account by invoking the provisions of section 145(3), no separate additions can be made on account of cash credit under section 68 even though the assessee has failed to discharge its onus of proof in explaining the amount shown in the books of account as 'market outstand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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